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University of Freiburg Institute for Economic Research Götz Werner Chair of Economic Policy and Constitutional Economic Theory (GWP) Platz der Alten Synagoge / KG II D-79085 Freiburg www.wipo.uni-freiburg.de Freiburg Institute for Basic Income Studies (FRIBIS)
Constitutional Economics
Network
Working Paper Series
ISSN No. 2193-7214
CEN Paper No. 02-2020
Globalization, Environmental Damage and the Corona Pandemic -
Lessons from the Crisis for Economic, Environmental and Social Policy
Bianca Bluma, Bernhard Neumärkera,b
a Götz Werner Chair of Economic Policy and Constitutional Economic Theory
b Freiburg Institute for Basic Income Studies (FRIBIS) Albert-Ludwigs-University of Freiburg
Platz der Alten Synagoge, 79098 Freiburg, Germany. Contact: [email protected] , [email protected]
30th April, 2020
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Abstract
The rapidly expanding corona pandemic in 2020 has largely brought the world to an economic stagnation. The impact on the environment, especially on air quality, from almost suspended air traffic, idle industry and economic lockdown is enormous, but also the economic and social consequences of the crisis. This state of stagnation hardly appears to be economically and socially sustainable. However, we should ask ourselves right now what we can learn from the situation in order to question globalization, better intercept future comparable crisis situations and take the step towards more sustainable development on an ecological, economic and social basis. The paper identifies the areas of externality management to improve environmental quality, digitalization and network expansion as well as basic income as central concepts that need to be addressed in and after the crisis. Concrete concepts are suggested and discussed at the end of the paper. Keywords: corona crisis management, basic income, environmental politics, pandemics, globalization, public policy JEL classification: H12, H23, H53 DOI: 10.13140/RG.2.2.10599.68008 This research did not receive any specific grant from funding agencies in the public, commercial, or not-for-profit sectors. Corresponding Author: Bianca Blum ([email protected])
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1. The corona pandemic and its effects
At the end of December 2019, cases of a new and unknown lung disease from the Wuhan
City region in the province of Hubei in China were reported to the World Health
Organization ((Lu et al., 2020); (Wang et al., 2020); (WHO, 2020a); (Zhu et al., 2020)). The
severe acute respiratory syndrome coronavirus 2 (SARS-CoV-2) or known as COVID-19 is
a zoonotic coronavirus, which is transmitted from the animal to humans and now
between humans (Ahmad et al., 2020). On March 11, 2020, the WHO classified the global
disease as a pandemic (WHO, 2020b). As of April 30, 2020, the Center for Systems Science
and Engineering (CSSE, 2020) counted 185 countries worldwide as affected by the
pandemic. As of this writing, the pandemic continues. As of April 30, 2020, 3.196.664
diseases and 227.723 deaths were registered worldwide. A higher number of unreported
cases is assumed due to low test capacities and unreported cases of illness. The United
States with 1.040.488 confirmed diseases are currently most affected, followed by Spain
with 236.899 and Italy with 203.591 diseases. Many countries are just at the beginning of
the pandemic.
The different degrees of affected regions and the severity of the course of the disease as
well as mortality are attributed to various parameters. In addition to the measures taken
in the respective country and their success rate, infrastructure parameters such as the
provision of intensive care bed, individual disease profiles and sociodemographic
characteristics such as age, as well as the environmental conditions in the respective
country, in particular air pollution, play a major role ((Anjum, 2020 ); (Conticini, et al.,
2020); (EPHA, 2020); (Guojun et al., 2020); (Pansini & Fornacca, 2020); (Wu, et al.,
2020)). Findings from environmental epigenetics also show that transgenerational
epigenetic inheritance of diseases such as asthma, allergies, cancer or obesity has
increased as a result of exposure to environmental toxins (Guerrero-Bosagna & Jensen,
2015). People who have these pre-existing conditions, such as cancer or obesity are more
likely to have a severe to fatal course with the current COVID-19 disease (RKI, 2020).
Numerous countries have taken drastic measures to curb the spread of the virus. Entry
restrictions up to border closings, exit restrictions or entire lockdowns were decided in
order to reduce the social interactions to a minimum and thus to reduce the spread of the
disease. International air traffic, tourism as well as traffic, the production of non-system-
relevant goods, the operation of restaurants, entertainment facilities and a wide variety
of shops were partially completely discontinued. In addition to the effectiveness of the
restrictive measures on the spread of the virus (WHO, 2020c), significant improvements
in environmental quality were also observed in various areas. The reduced economic
activity led to a significant improvement in air quality in regions particularly affected by
air pollution ((Anjum, 2020); (Benchetti et al., 2020); (Dutheil et al., 2020); (Vaughan,
2020)). Satellite pictures from China showed significant reductions in nitrogen dioxide
(NO2) emissions in the period between January and February 2020, in which the
country's corona measures also contributed to the massive reduction in the country's
economic activities (NASA, 2020). According to more recent data, however, they rose to
the level before the pandemic in March (Carbonbrief, 2020). Although these increased
again due to the resumption of certain industries, overall emissions decreased by around
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200 million tons of carbon (25%) within four weeks after the Chinese New Year
(Carbonbrief, 2020).
The outbreak of the corona pandemic and the rapid spread, as well as the severe course
of illnesses in connection with poor air quality made many scientists ask about the
connection between infectious diseases, economic activities and the general question of
sustainable development ((Corlett et al., 2020); Dutheil et al., 2020); (Lucchese & Pianta,
2020); (Vaughan, 2020)). Not only the positive observations of the apparently rapid
recovery of some natural conditions due to the minimal economic level, but also the rapid
spread and unexpected harshness of the virus pose questions about the future of the
global economy. In the face of the Corona crisis, society has had to experience the limits
of globalization.
Financial markets around the world are nosediving in response to lockdowns and the
spread of the pandemic. The European Central Bank (ECB, 2020) has therefore already
announced € 750 trillion for the Pandemic Emergency Purchase Program (PEPP) in a
press release dated March 18, 2020. The Economic Outlook report of the OECD in March
(2020) shows the economic consequences of the corona pandemic. Assuming mellow
pandemic patterns, annual global GDP growth is expected to decrease from 2.9% in 2019
to 2.4%. For China, growth is expected to drop below 5%. In particular, effects on
confidence, the financial markets, the travel sector and the supply chains will also
contribute to further slumps in growth in the G20 economies. These prospects are
strongly correlated with the further course of the pandemic and become less optimistic
the longer the pandemic continues. A global growth rate of 1.5% in 2020 could even occur
in the event of an ongoing crisis (OECD, 2020). Governments are encouraged to take quick
and effective action. In addition to restoring global health, financial protection of social
groups and companies as well as accompanying macroeconomic measures to restore
economic demand and thus to promote growth are on the agenda.
However, not only the global financial markets, but also the individual economies are
increasingly in economic misery. Many workers lose their jobs, companies have to switch
to short-time work or close it completely, and many freelancers, especially artists and
cultural workers as well as small businesses, can no longer finance themselves. For this
purpose, the individual countries have designed different measure packages. The German
government, for example, is providing a multi-billion-dollar aid package. In addition to
supporting the health sector and fighting pandemics, payments to cushion the loss of
income for families, companies, freelancers and individuals are promised and large
economic structure funds with guarantees and loans are set up (BMF, 2020). However,
numerous cases occur in which those affected need help, but are not covered by
government measures, e.g. people whose share of household income is relatively small
will lose their professional independence.
The corona pandemic as a global threat means that the world is obviously in a health crisis
that is increasingly developing into a financial, economic and, above all, social crisis. In
connection with globalization, Gills (2020) even speaks of three crises in which we are
currently; the capitalism crisis, the ecological crisis and the corona pandemic as a health
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crisis. The implications that we can derive from this must address globalization directly
and fight the emergence of these three crises.
The aim of this paper is to draw implications from the corona pandemic for the future of
economic, environmental and social policy. In particular, implications with a focus on the
German and European economy are to be derived. The focus is on the connection between
globalization, environmental damage and pandemics. Only a combination of economic,
environmental and social policy objectives as a strategy after the crisis can contribute to
ensuring a sustainable resumption of economic activities. It is important to reduce the
likelihood of outbreaks of further pandemics by effective, environmental policy
regulation, and to strengthen the economic and social robustness of the individual
countries in the event of pandemics.
In the second section, the relationship between globalization, environmental damage and
the emergence and spread of infectious diseases that can develop into pandemics is
presented. This is followed by a brief overview of the bottlenecks identified during the
corona pandemic and the measures that have led to the successful management of the
crisis situation so far. Implications should then be derived from them, which contain
impulses for future economic, environmental and social policy after the crisis.
2. The link between globalization, environmental damage and the emergence of
pandemics
The connection between economic growth and environmental damage is by no means a
new discussion, but has already been addressed by numerous researchers (e.g. Brock &
Taylor, 2005). Likewise, the human-made effects on climate, biodiversity, air quality, and
other environmental parameters have recently been a threat to long-term human health
((Burkle, 2020); (Qiu, 2017); (Watson & McMichael, 2001); (McMichael et al., 1999);
(IPPC, 1990)). It is therefore not surprising that some researchers see the connection
between the corona pandemic and globalization ((Karabag, 2020); (Yacoub & El-Zomor,
2020)) and question how a sustainable development could look like. Let us consider the
three states of crisis in which the global economy finds itself: first, the ecological climate
crisis, second, the systemic capitalism crisis of neoliberal globalization, and third, the
health crisis, triggered by the pandemic of COVID-19 disease (Gills, 2020).
First of all, it is important to understand what globalization means in order to then be able
to discuss the connection between globalization, environmental damage and the
development and spread of diseases. We also want to link this to the Corona crisis in this
section. Lee (2004) fixes the concept of globalization on three types of change, spatial,
temporary and cognitive. The change at the spatial level includes the free movement of
goods, services, information and people across national borders. Along with this,
however, is the movement of emissions and environmental externalities that arise on a
national level and become a global or at least nationwide problem. Global networking not
only favors trade and the mobility of people in private as well as on the job market, but
also poses the question of global externality management in order to counter climate
change and environmental damage. In the event of an outbreak, this free movement of
goods, services and people ultimately accelerate the extremely rapid spread of the same
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through to the development of a pandemic, as we did with the SARS disease in 2003 ((Qiu,
2017); (Lee, 2004); (Syed et al, 2003)) and have now seen on the basis of COVID-19
disease. The critical phenomenon is well known and should have led to measures to
increase resilience and restrictions in the free movement of goods after the first SARS
crisis. However, the collateral damage to health, the environment and the social system
was apparently assessed as being manageable or too minor. In any case, adaptive
economic, social and political learning did not occur.
The temporary and cognitive changes that Lee (2004) attributes to globalization are just
as relevant to environmental damage and pandemics as they are to dealing with
pandemics and the perception of regulatory restrictions to slow the spread. With
temporary changes Lee (2004) describes the time perception and time management of
people who in this context raise questions of individual sovereignty, which we will come
back to in our socio-political part. Modern communication technologies and increasing
pressure to keep up with the rapidly developing environment require more and more
time optimization from individuals. With the economic lockdowns and forced slowdown,
the corona pandemic now presents individuals with the need, but also a new option, to
use their available time, which is more difficult for some than others ((Barry, 2020);
(Vanderkam, 2020)). It seems that the increasingly fast-paced world is overwhelming
some individuals to take advantage of free time that is not determined by external
appointments or entertainment events. Lee (2004) describes cognitive change as looking
at the world around us. Above all, the influence of media, advertising, but also of politics,
religion and research affects the wishes and needs, values and beliefs1 as well as the
aspirations and level of knowledge of the individual. These changes in the course of
globalization lead to ever increasing pressure to grow. Changes in perception of time put
pressure on individuals not to miss anything. Combined with the needs for consumption
set by the media and companies and the increasingly cheaper products due to the spatial
overcoming of distances and production in third countries, growth is emerging. Blum et
al. (2019) address the problems with growth in a sustainable economy and differentiate
between structural and psychological growth factors.
Structural growth is primarily due to the problem of the imputed assessment of GDP as a
welfare indicator and the ignorance of environmental damage in this calculation (Blum et
al., 2019). This is particularly evident in the current crisis because most of the measures
in the Corona crisis are aimed at maintaining growth or boosting it after the crisis, and do
not consider alternative ways that are not linked to economic growth (e.g. (BMF, 2020);
(ECB, 2020); (OECD, 2020)).
By contrast, psychological growth drivers are linked to the temporal and cognitive
changes in globalization. Individuals are subject to money dependency in order to meet
their culturally induced demands for material self-fulfillment (Paech, 2016, p. 65). They
live according to the principle to be able to afford as much as others (Paech, 2016, p. 64)
and in a constant fear of the less (Paech, 2016, p. 66). The satisfaction of these consumer
needs demands enormous economic growth. This growth is only possible through the use
1 See also: Postlewaite (2011).
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and overuse of natural resources such as air, water and raw materials and through the
exploitation of people in developing and emerging countries. Stengel (2011) sees the
psychosocial function of consumption, which produces a materialistic consumption and
lifestyle, as the strongest driver of the ecological crisis. Decades of increasing globalization
and its consequences have contributed to a global, ecological crisis and brought about the
current pandemic as an expression of years of environmental destruction and human
intervention in ecological systems (Gills, 2020).
One answer to the three crises mentioned is the provision of (global) public goods: „Global
threats need a global response“(Fiedler, 2020, p. 165). Globalization has created
numerous institutions that ensure the mobility of people, goods and services and
consequently promote free trade, but it has failed to create common, collective rules for
environmental standards, labor markets and health policy, as well as strategies for the
emerging redistribution problem through common social policy (Lucchese & Pianta,
2020). This reflection on global collectivism is more necessary than ever in the current
global crisis situation, not only in relation to the corona pandemic, but against the
background of future developments (Burkle, 2020). „We must move now rapidly towards
a post nationalist mentality, based on our common human interests“(Gills, 2020, p. 2).
„We need to radically rewrite the rules of globalization. Health, welfare, labor rights and
the environment must be protected by international standards, which should be binding
for the international movement of capitals and goods“(Lucchese & Pianta, 2020, p. 102).
„Controlled globalization would be an optimal solution - with international aid and
cooperation, necessary for minimizing the repercussions of natural catastrophes, coupled
with a mechanism of learning on the part of the authorities of particular nation
states“(Brzechczyn, 2020, p.90). These quotes should also be seen in connection with the
particularly flaring demand for social solidarity. This leads directly to the question of how
one can shape a corresponding reform and transformation policy or movement based on
these new normative challenges.
To this end, measures and ways are to be suggested in the next section to promote a socio-
ecological transformation in Germany and Europe in order to counter the crises of
globalization in the long term.
3. Implications from the crisis - what are the next steps?
Nonetheless, the ecological crisis is the most serious of the three crises mentioned in
Section 2 in the long term and, unlike the Corona pandemic, will not subside in the
medium term. It will therefore continue to be necessary, to stick to climate change efforts,
further reduce emissions and take measures to rethink civil society and politics. However,
the crisis of global capitalism, the social crisis, e.g. by increasing insolvencies, increasing
debt, increasing poverty and unemployment and inequality, currently further
exacerbated by the pandemic (Gills, 2020). When resuming economic activities and
emerging from the health crisis, care must therefore be taken not to act at the expense of
the other two crises, but rather to find a solution mechanism for the causes of all three.
Gills (2020, p.1) rightly calls for global rethinking: “We shall need new forms of collective
human consciousness; a new type of global social covenant; new forms of appropriate
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technology; and new forms of appropriate lifestyle ". However, a path of nationalism and
populism should in no way be chosen that amounts to the isolation of the individual
countries ((Fiedler, 2020); (Yacoub & El-Zomor, 2020)). In European politics in particular,
it is now important to take a path together that creates a stable community of values that
is better prepared for crises and supports each other in and out of the crisis (Neumärker,
2020b). In the long term, both fiscal policy issues such as the assumption of the financial
burden of the corona pandemic and a common environmental and social policy direction
must be the EU's target. Europe could thus play an important pioneering role
internationally as a model for common standards in the areas of health, welfare, self-
determination of self-determined citizens and environmental policy (Lucchese & Pianta,
2020, p.101).
In this section, opportunities are to be suggested to shape a socio-ecological
transformation in Germany and Europe in order to counter the ecological crisis in the long
term, which is exacerbated by globalization, but also to stop the capitalist crisis, which is
also caused by the Globalization is being strengthened in order to prevent or at least
better intercept health crises arising from globalization in the long term.
3.1. Reduction of environmental externalities
As already mentioned, the course of the disease of COVID-19 depends on various
parameters. It has been shown that the course of the disease in patients from areas with
high air pollution is increasingly emerging as serious (Pansini & Fornacca, 2020).
Conticini et al. (2020) find evidence of the relationship between high mortality due to
COVID-19 disease and air pollution in the respective region of the patient. Wu et al. (2020)
found significant evidence for the USA, namely that an increase of 1 µg/m3 particulate
matter in the air leads to a 15% higher death rate for COVID-19. There are also utilitarian
researchers who ask whether the state-ordered quarantine (especially in China) saved
more lives in total than the COVID-19 disease due to the rapidly falling air pollution
(Dutheil et al., 2020). Burke (2020) estimates 77,000 less deaths from reduced air
pollution as a result of the lockdown over a period of 2 months (January-February).
Empirically, Guojun et al. (2020) demonstrate the relationship between better air quality
in China and the corona pandemic. In Europe, particulate matter pollution alone caused
around 412,000 premature deaths in 41 European countries in 2016 (EEA, 2019). This is
by no means intended to be a positive assessment of the corona pandemic, but these
figures clearly show the health-related relevance of improving air quality in many
countries and thus a trade-off between environmental quality and economic power that
is neglected in economic, health and social policy terms.
Because air pollution is not only acutely relevant to health policy, but is also an expression
of the increased environmental damage caused by globalization and industrialization. In
addition to health effects, economic losses due to polluted air should not be
underestimated. Not only increased pressures on the health system due to rising costs,
but also lower labor productivity of previously stressed workers and lower yields in
agriculture and forestry (EEA, 2019) have to be priced in as a consequence of air pollution.
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Further standards must therefore be set and tightened that reduce air pollution
sustainably ((Guojun et al., 2020); (Sofia et al., 2020)) and are appropriately flanked in
social policy terms. For example, the introduced carbon taxation must be checked for its
effectiveness or through other approaches, such as personal carbon trading ((Raux et al.,
2015); (Starkey (2012); (Seyfang et al., 2007)) or the climate bonus can be rethought and
debated.
Sofia et al. (2020) derived numerous recommendations in their study on reducing air
pollution. In addition to the well-known areas such as transport and energy consumption
in the household sector, they also identify other sectors that can be useful for a strategy
after the corona pandemic. A change in nutritional behavior with a lower proportion of
animal products can also save a significant amount of emissions and other external costs
((Blum, 2020); (Sofia et al., 2020); (Xue et al., 2019); (Ranganathan et al., 2016);
(Wissenschaftlicher Beirat für Agrarpolitik, 2012)). On the health level, in addition to the
indirect effects of improved air quality due to changes in eating habits, there is also a
direct reduction in nutritional risks, such as cardiovascular diseases or obesity
((Wissenschaftlicher Beirat für Agrarpolitik, 2012); (Gold, 2004)), so that additional the
health system could be relieved (European Commission, 2008). Factory farming itself is
also criticized for favoring the emergence of pandemics (Samuel, 2020). This could, for
example, revive the discussion on the taxation of animal products. Approaches such as
those from FÖS (2020, 2013) or Blum (2020) could help using fiscal instruments to
influence the promotion of more sustainable eating behavior in a socially acceptable
manner. In addition to the absolute reduction in the animal portion of the diet, the
efficiency of animal husbandry and in the agricultural sector in general can also be
improved, for example by shorter transport routes (Sofia et al., 2020) or the reduction of
waste (Xue et al., 2019).
The promotion of regional production and consumption plays a central role in reducing
externalities. This applies not only to the reduction of emissions by shortening the
delivery routes and reducing the storage and cooling times of individual goods. The
pandemic taught us above all that in times of border closings and economic lockdowns,
entire supply chains can break off. So, it can happen that, starting with individual goods
that can be dispensed with, essential goods are no longer available, such as medication or
suitable protective clothing for nursing staff in the health crisis ((Karabag, 2020, p.2);
(Yacoub & El-Zomor, 2020, p.11)) or even basic foodstuffs are suspected to be
undersupplied. A strong global relocation of production and manufacturing facilities is
cheaper, but carries a higher risk that important goods will no longer be available in times
of crisis. It has been shown that the greatest advantages of globalization due to the
consequences thereof, namely a pandemic, no longer apply in lockdowns (Fiedler, 2020,
p. 165). A cost-benefit assessment of essential goods and services must therefore be made
as to whether regional provision would be possible and sensible (Yacoub & El-Zomor,
2020, p.13). Regional production and the associated regional consumption also have
socio-political advantages. The return of the production facilities, especially to Europe,
can reduce unemployment and give more people, especially in poorly developed regions
of Europe, the opportunity of a professional future. Possible price increases are part of the
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cost-benefit assessment to reduce the three crises of globalization and in consumer
behavior also as a result of a relatively increased willingness to pay for goods that are in
short supply. Resilience and sustainability then play a more important role in the
individual as well as socio-political target system compared to maximizing economic
growth.
3.2. Digitalization and worldwide networking
Digital systems have become very important in the corona pandemic. They allow
information to be generated and disseminated quickly and ensure interpersonal
communication in times of social distancing. In the crisis, digital opportunities have
proven to be particularly useful in the areas of the labor market and the education system
((Fiedler, 2020, p.165); (Sutkowski, 2020, p.6)). Companies had to realize that business
trips across the globe can also be mastered with a video conference on the whole. The use
of video conferences has also proven to be suitable for politicians in order to hold
necessary crisis meetings. Many employees can easily carry out their work in the home
office without the company suffering any losses due to employees who have suddenly
become lazy or who need to be controlled. Pupils and students can access learning content
from anywhere in the world at any time through asynchronous learning, digital teaching
models and digital classrooms. All of this was not made possible by the crisis, but the crisis
has shown through the pressure to change that the long-standing skepticism regarding
the adaptation of the technical possibilities was unfounded. This can and must have
consequences after the crisis. Business trips, commuting to work, presence in schools and
universities and similar situations must be questioned as to their strict necessity. This not
only facilitates the rapid containment of a disease in health policy crises, but also has an
ecological and socio-political impact. Avoiding air travel, commuting and even the
possible reduction of office space obviously has an impact on global emissions and
resource consumption and can therefore lead to very rapid and significant improvements
in air quality. These improvements affect both the climate and the health of the population
in regions heavily affected by air pollution. In terms of social policy, this also has an impact
on different sections of the population, such as families: for example, parents can organize
childcare better without a state childcare facility due to relaxed home office conditions.
This is also shown by the efforts of the German Federal Minister of Labor Heil form the
SPD party, who is currently working on a draft law on the right to home office
(Deutschlandfunk, 2020).
It is becoming increasingly clear that Germany has failed to expand digital networks for
too long ((Dalg, 2020); (Gerginov, 2020)). Remote regions have extremely weak internet
connections, under which a home office or home schooling seems tedious to impossible.
Connections break down due to the high demands of streaming portals and video
conferences. Germany is lagging behind in international comparison. For the future after
the crisis, this also means the necessary advancement of the network expansion. Only this
can meet the requirements of digitization and realize the ecologically valuable
opportunities of video conferences, home offices and decentralized work.
The situation in the education sector has also revealed that there are significant
grievances in the education system with regard to equipping students with technical
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means. Many cannot perceive contact-free learning, such as digital lessons at home. Low-
income households in particular do not have the technical possibilities or the know-how
to optimally support their children in home schooling ((FRG, 2020); (GEW-BW, 2020)).
Interest groups even see the current situation in home schooling as a danger of worsening
discrimination against certain social classes. Due to the advancing digitalization, the
shortage of teaching staff and the future challenges of globalization, digital learning will
gain in importance. However, this requires high investments in the public education
sector in order to provide schoolchildren with the technical possibilities that poorer
households in particular do not currently have. The current crisis clearly shows the need
for a socio-political transformation against the worsening of social inequality and
educational (in)justice.
3.3. Basic Income in the crisis – an approach
The economic lockdown in the Corona crisis has had extreme social consequences. In
Germany, many workers had to switch to short-time work, especially smaller companies
are facing bankruptcy, mini-jobbers are losing their livelihood, the considerable increase
in personal bankruptcies, especially due to rent and loan obligations, is feared, and the
state has to pay billions in aid packages (BMF, 2020) to step in and still fail to help
everyone enough.
Even worse is the economic situation for people in countries where there is hardly a social
security system like e.g. in Germany. In Italy, groceries have already been looted as the
population can no longer earn wages and needs food (Euractiv, 2020). The discussion
about Eurobonds in order to distribute the borrowing of countries within Europe is met
with strong rejection in some countries ((Pena et al., 2020); (Yacoub & El-Zomor, 2020,
p.12)). What are the arguments against political decision-makers and their leadership
styles such as however, judging moral hazard behavior in the past does not help the
people of Europe. A common European community must bear its common consequences,
particularly in times of crisis (Neumärker, 2020b). Lucchese & Pianta (2020, p.101) even
advocate a common financial policy for the European Union in the long term.
The discussion about the idea of a universal basic income is becoming louder as a possible
solution, especially now in times of crisis ((Merz, 2020); (Petition 108191, 2020)).
Regardless of whether you are a supporter or opponent of a basic income, you should
think through the functionality of such a construct in a crisis as we are now and consider
its introduction beyond the crisis as a partial replacement for traditional social policy.2
Let us consider a universal basic income as "an income paid by a political community to
all its members on an individual basis, without means test or work requirement" (van
Parijs, 2004, p.8). All sanctions as under Hartz IV are also no longer applicable. This
unconditional income is additionally "paid in cash, rather than in kind" (van Parijs, 2004,
2 To be able to adequately question and analyze the inadequate suitability of mainstream economics, basic income and its (non) monetary effects, along with the laziness thesis and insufficient financeability, one of the authors has stated in other publications (Palemo Kuss & Neumärker, 2018; Neumärker 2018). Regarding the basic concept of the “new ordoliberalsimus” in this regard, cf. Neumärker (2017).
12
p.8) and "paid on a regular basis, rather than as a one-off endowment" (van Parijs, 2004,
p. 9). For example, the beneficiaries of the basic income could be all citizens of a country
or the European Union.3
The amount of this basic income would have to be chosen in times of crisis in such a way
that the minimum standard of living of a person can be maintained. Here you can start
conceptually with the supply of food and essential goods. The amount of the monthly
payment per person could be determined on the basis of average consumer spending by
private households. In 2018, a one-person household spent an average of € 1.706 per
month on private consumption (Destatis, 2020). In order to assess a minimum level of
living standard, all consumption expenditure that is not absolutely necessary in the crisis
could be excluded. This affects, for example, expenses for restaurant visits, leisure and
cultural offers and other goods & services. If you limit the minimum security to
expenditure on food, clothing, housing, health and mobility, the need is reduced to € 1.213
for an individual. The average cost of living and energy is € 662 (Destatis, 2020). These
decrease accordingly in multi-person households (Neumärker, 2020a).
In addition to the basic expenses for food and minimum consumption, payments such as
rents, loan interest and repayment obligations and liabilities that have already arisen are
problematic. If people lose their jobs due to the crisis or have less money available due to
short-time work, they quickly run into financial need if current expenses still have to be
paid but earnings collapse. The same applies to companies and freelancers who, for
example, have to cease their business as a result of the crisis or suffer severe losses as a
result of declining consumer activity. So, let's also use a second tool to deal with the
aftermath of the crisis, namely the temporary suspension of financial obligations such as
rent payments, loan servicing and other payment of bills, like wage payments or payment
for goods and services that existed before the crisis began4. Let us therefore suspend these
obligations unbureaucratically for everyone during the period of the crisis and extend
contractual agreements by the period of suspension. Nevertheless, everyone is paid a
corresponding net basic income5 to cover the inevitable consumer spending,
unconditionally and unbureaucratically. By suspending the financial obligations, this
could now be reduced by the average expenditure on rental payments and would
therefore still be € 551 for a one-person household. Since children and adolescents
generally still live with at least one parent in the household, the consumption expenditure
required for this group, for example for food or mobility, is reduced. Many basic income
concepts therefore propose around half of the basic amount for adults for children (Mein
Grundeinkommen, 2020).
Now you have to look at the next level, with companies, landlords, credit institutions and
all those who no longer receive rents due to this suspension, get paid bills or make profits
by providing credit. Their running costs are also suspended and all employees and owners
receive at least their basic income instead. Ultimately, this mechanism means that all
3 At this point, however, we do not want to deal in detail with the conceptual design of basic income. 4 See, for example, Kaas (2020) with a similar proposal. 5 The gross basic income includes the payment obligations mentioned, the net basic income is the amount upon suspension of interest payments for renting, leasing, lending, etc.
13
those whose economic activity is hampered by the crisis and who are unable to continue
to obtain monetary resources are compensated for it. If appropriately designed, their level
of living and care would not decrease during the crisis. In addition, state crisis loan
assistance is no longer required in order to pay current rent and loan obligations. The
resulting significant redistribution consequence from income earners shut down for
health policy reasons to those with unearned income from renting, leasing and lending
would not occur. Such an unconditional net basic income would counter the asymmetrical
treatment of usual aid programs due to the assumed need to be able to pay rent and loans
by providing symmetrical help to everyone.
Nevertheless, there are those who are classified as systemically important in the crisis
and continue to participate in the labor market. They also receive a basic income
unconditionally and in addition to their existing work income. Current payments and
costs are also suspended for them. Basic income is an additional source of income for them
and acts as compensation for their social commitment, which is still necessary. In
addition, the net basic income has the immeasurable advantage of being able to take full
advantage of a crisis with many uncertainties and constantly emerging social and
economic policy challenges that also fail to achieve the best target-accuracy planning for
loan assistance and transfer payments (targeting, earmarking, etc.).6 Ultimately, we end
up with the state, which in the current crisis already has enormous amounts of money for
cash payments, short-time work benefits, loans etc. must move. In addition, capital
owners and landlords are affected, which in the current crisis are the only ones that can
continue to skim off profits at the expense of everyone else. The underlying symmetry
regulation through the net basic income leads on the one hand to equal treatment, on the
other hand to breaches of contracts. Contract protection is, however, normatively
underpinned by an interpretation of the suspension of payments from the social
commitment of property in significant crisis situations (Neumärker, 2020a). The contract
extension also simulates that the crisis time is excluded.
A suitably designed system of an unconditional basic income can even turn out to be less
extensive in fiscal terms than the previously introduced aid measures if administrative
effort and costs are saved with the same payment volume. With an amount of € 550 for
adults and € 275 for children, a financing volume measured against the German
population (as of December 31, 2018) would total € 42.76 billion7 necessary (Statista,
2019). This would be significantly less than the measures currently decided and their
financing volume of € 353.3 billion and additional guarantees of € 819.7 billion (BMF,
2020). In addition, the amount for children in Germany is already partially covered by
child benefit. Such a basic income can emerge as crisis-proof through a suitable source of
finance, for example through VAT financing in combination with an environmental tax
dividend (climate premium) or a wealth tax. If Hartz IV payments and pension payments
6 Unforeseen and (un)deliberately covered events (e.g. because they are not classified as necessary to save budget, since the group concerned is politically uninteresting), which do not allow target accuracy, are adequately covered by the basic net income as an ex post governance rule. 7 Calculated according to the absolute numbers of adults (≥ 13 years) and children (< 13 years): (72,48 ∗550) + (10,53 ∗ 275) = 42.759,75 (in € million).
14
are also offset or replaced, the only social security benefit left is health, e.g. could be
maintained via a tax-financed health fund or require the additions to the net basic income
in order to be able to obtain the necessary health care services.
The suspension of current financial obligations is normatively justified by the
maintenance of a basic income. In the long term, the mechanism could be used flexibly as
an unbureaucratic instrument in times of crisis in order to ensure that citizens are
provided with care immediately and without prior or subsequent needs tests. After the
crisis, the basic income mechanism could be built up in the context of increasing economic
power, for example as a socially acceptable share of GDP (share as a common good)
towards a participatory gross basic income and then melted back to net basic income in
the subsequent crisis. To a certain extent, this basic income concept would be an
automatic crisis and prosperity mechanism that stands in the way of the traditional
transfer system, which tends to be overregulated and presumptuous, which only seems to
be accurate and appropriate to the individual case. At the European level, a solidarity
income, which is provided by the European community of values (Neumärker, 2020b)
and the economy, could be a suitable instrument for securing minimum needs across the
EU or the euro area, in order to quickly and effectively help citizens and companies in
times of crisis securing the EU or the euro area as an advantageous structure for all
citizens. If the European basic income is saddled on the national systems, one speaks of
the euro dividend. In the long term, this could be a European coordinated VAT surcharge
(e.g. (van Parijs, 2013, 2019, 2020)) or a tax on the integration gains (Neumärker, 2020b)
as a toleration premium for each member citizen, which tolerates or supports
asymmetrically distributed economic integration advantages and thus the liberal
economic integration of Europe as a European shareholder, even if he could not generate
any significant advantages himself.
3.4. General Implications
Lucchese & Pianta (2020, p.102) generally advocate an expansion of the welfare state,
especially in the areas of health, education, research, old-age security, social security and
environmental protection. Concepts such as more regional production could be indirectly
promoted through more targeted, political incentives, for example by taxing transport
routes in the sense of a carbon tax. In the same way, targeted environmental tax revenue
can be used to refinance the additional costs, e.g. in the sense of an unconditional basic
income. Much of the air pollution can also be influenced by humans, e.g. through heating,
transport or energy consumption (cf. EEA (2017, 2019)). Here too, e.g. fiscal incentives
could improve the energy efficiency of buildings (Bencchetti et al., 2020, p.14).
As already mentioned in Chapter 2, global collectivism is necessary to meet global crises.
A cooperative approach at local, national and international level will therefore be
necessary in order to be able to face pandemics, climate crises and other challenges of the
global world in the future (Fiedler, 2020). This can be implemented at several levels and
does not always require an international solution. The proposal of the euro dividend
should be checked for its transferability to the global level. Development aid could also be
converted to a Foreign Aid Basic Income (FABI) (Neumärker, 2020a) for the self-
15
determined development of developing countries, which can be reduced to the extent that
the developing country concerned has built up sufficient financial power to provide a self-
financed basic income.
van den Bergh (2011) deals with the possibility of a working time de-growth in the
context of the implementation of environmental strategies. Making the labor market more
flexible and reducing weekly working hours due to increasing labor productivity could be
an important element in turning away from the pressure to grow. The reduction of weekly
or annual working hours in response to the increasing productivity of work can thus help
to turn away from the persistent pressure to generate income and the resulting pressure
to consume and thus also to reduce health-related work stress.
The COVID-19 disease creates almost equality in terms of the risk of infection of the
disease. Social positions do not allow you to buy yourself free from the disease. This
equality of risk should also apply to individuals when fighting the crisis. However, this
equality can not only be achieved through medical care for patients, but must be
implemented as a fundamental element in the welfare state (Lucchese & Pinata, 2020,
p.103).
4. Conclusion
Continued economic growth in the wake of globalization has led to an increasing
networking of the world's population. This strong connectivity has not only brought
advantages, it has also led to an increase in inequality and injustice. This affects both, the
environmental conditions in which people have to live, the social standards and the
distribution of opportunities, wealth and income as well as working hours and leisure
options. The Corona crisis reminds us that for years we have failed to tackle the
environmental and social policy crises conceptually and effectively and to combat them
with an integrated approach.
This contribution identified three areas in the discussion about possible implications for
the resumption of economic activity:
1. Reduction of environmental externalities
2. Digitization
3. Basic Income
In the area of reducing environmental externalities, instruments of externality pricing are
particularly not worthy. In addition to the necessary adjustment of carbon taxation and
emissions trading as well as the general handling of externalities, e.g. in the field of
nutrition, the promotion of regional production should be central to future environmental
policy.
Digitalization enables key concepts such as the elimination of business trips, home office
and the flexibility of the labor market in terms of working-time de-growth in general.
Here, too, it has been shown that there is a considerable need for investment in the
expansion of the networks and the necessary infrastructure. Digital change, especially
from a socio-political perspective, should in no way help to exclude and discriminate
16
against social groups. Rather, investments in education and the flexibility of work models
are necessary to enable the compatibility of digital opportunities with real work and
education structures.
In times of crisis and beyond, basic income is a necessary instrument to ensure that crises
are dealt with effectively and quickly. In this article, we outlined the idea of a universal
basic crisis income, the conceptual design of which requires further research. Above all,
this must focus on the effects of unconditionality compared to the needs test, the
imposition of conditions and sanctioning, as well as the traditional policy maxims behind
it, of target accuracy and individual case regulation, and ask questions about the effects
on the economy. In times of crisis, the proposal made here can be paid out in addition to
existing payment flows without tax credit. However, the implementation of a concept
going beyond the crisis should include compatibility or replacement of other social
benefits and discuss a long-term financing concept.
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